The Trust is generally designed so that contributions are held and invested collectively in a “pooled account.” (The Trust provides the individual Employee Accounts (discussed in Part D) for limited purposes.) There are certain advantages to pooling funds, including:
- Higher investment assumption is reasonable. This Trust is different than an individual “Health Savings Account” (“HSA”). This Trust invests the pooled account on a long-term time horizon. The Trustees do not move the investments in a pooled account to a more conservative earnings assumption as a given retiree ages, since the pool is always gaining more funding, and doesn’t have a limited life span. Contrast that to a retiree over age 55 with an individual account and no more funding, who generally moves to a more conservative investment portfolio as he/she ages. Actuarial studies clearly demonstrate that this plan design produces greater aggregate benefits to beneficiaries.
- Lifetime benefit payments. The pooled part of the Plan is designed to provide a monthly stream of benefit payments for the retiree’s lifetime,3 plus a continuing benefit payment stream to the Surviving Spouse during retirement years, until his or her death. This will become very important in a retiree’s later years, when an individual HSA account might run out.
New Option to join only for Employee Account participation. As described above, there are advantages to a pooled plan. Nonetheless, the Trustees understand that in current economic conditions, it may be difficult for an Association to negotiate a regular payroll transfer from salary into the pooled account of the Trust. Accordingly, the Trustees have adopted a policy that allows Associations to join the Trust only for the individual Employee Accounts – by transfer of sick or vacation leave. See Part D for more details.
Option to join both with payroll transfer and sick/vacation leave transfer. Also, any Association can choose to negotiate a regular payroll transfer from salary to the pooled part of the plan, and also to transfer sick or vacation leave into the Employee Accounts.
3 The Plan is designed to provide monthly reimbursement benefits to Eligible Retirees until death. However, benefits from the Trust are not vested, and the Trustees reserve the right to modify and/or terminate benefits as necessary to preserve the financial soundness of the Trust.